LG Electronics Expects Second-Highest Q1 Profit of W1.5tr, Outpacing Samsung Electronics in Over a Decade

LG Electronics, a leading consumer electronics giant, has forecasted its first-quarter operating earnings at 1.5 trillion won ($1.14 billion), which is expected to be the company's second-highest profit for the January-March period

LG Electronics, a leading consumer electronics giant, has forecasted its first-quarter operating earnings at 1.5 trillion won ($1.14 billion), which is expected to be the company’s second-highest profit for the January-March period. This estimated profit surpasses Samsung Electronics’ financial result for the first time in over a decade, marking a significant achievement for LG in the competitive consumer electronics market.

In its earnings guidance, LG Electronics estimated a 23 percent decline in operating profit from a year ago. However, this operating income still exceeded the local analyst consensus value of 1.1 trillion won provided to market intelligence FnGuide. Sales were also expected to have decreased 2.6 percent on-year to 20.4 trillion won, which is the third-highest figure in the first quarter, slightly lower than the market consensus of 20.8 trillion won. Please note that data for net income was not available in Friday’s earnings guidance.

This impressive performance means that LG has outpaced Samsung Electronics in quarterly profit for the first time since it adopted the International Financial Reporting Standards in 2009. Earlier on the same day, Samsung reported a 14-year low quarterly operating income of 600 billion won due to the global chip downturn.

LG’s first-quarter operating earnings have actually risen by 10-20 percent from a year ago, considering the 80 billion won temporary gains from patent licensing generated in the first quarter of last year. This remarkable growth can be attributed to LG’s company-wide efforts in restructuring its business portfolio and operational structure, as well as its rapid expansion in the promising vehicle component solutions business and business-to-business market.

While detailed figures for each business sector were not available in Friday’s earnings guidance, market watchers expect strong results from LG’s key business divisions for home appliances, TVs, and vehicle components in the January-March period. According to Hyundai Motor Securities’ research head Noh Geun-chang, LG’s shipments of refrigerators, washing machines, and air conditioners are likely to have improved in the first three months of this year compared to the previous quarter. He also noted that the operating profit margin has improved due to reduced logistics and marketing costs, as well as Europe’s economic recovery.

Market analysts predict that LG will continue to experience earnings growth in the April-June period, with NH Investment & Securities analyst Lee Kyu-ha forecasting “full-fledged earnings expansion” in the latter half of the year, supported by a recovery momentum in home appliances and TV demand, as well as a positive outlook for the vehicle components’ order backlog.

LG’s earnings guidance was announced on Friday at midday, and the company’s shares ended trading at 114,300 won on the same day, up 0.35 percent from the previous session’s close.

LG Electronics’ estimated second-highest Q1 profit of W1.5tr, surpassing Samsung Electronics’ performance, is a significant milestone for the company. With its strategic efforts in business restructuring, promising growth in vehicle components, and favorable market outlook, LG is well-positioned for continued earnings expansion in the coming months.

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